BBA takes off with surprise dividend boost

BBA shares rocketed 13pc yesterday after the aviation services and materials group unveiled better-than-expected profits and an increased dividend for last year.

The company posted a 9pc rise in profit before tax to £134.3m, which was 11pc higher when currency translations were stripped out. A 4pc increase in its dividend to 10.5p was the unexpected factor for most analysts, who also praised the company's strong cash flow.

The group also announced it would seek approval from shareholders to buy back as much as 15pc of its capital. Analysts said yesterday's dividend increase and profit had put BBA on a price to earnings ratio of seven times, and yielding 7pc, before trading opened yesterday.

In a research note, Cazenove analyst Edward Stanford said the dividend increase and share buyback "give a strong signal of management's confidence in the cash generation potential of the business and its ability to weather any war-related disruptions".

Chief executive Roy McGlone said he expected both BBA's divisions, aviation services and specialist materials, to post "organic" growth this year of about 2pc-3pc, but both would seek acquisitions.

Related Articles

Aviation services posted a 1.3pc increase in earnings last year, driven by contributions from acquisitions. The materials technology division also reported slightly improved earnings, though its turnover fell 1.6pc.

Mr McGlone said aviation market uncertainties associated with impending Middle East conflict and terrorism would mean the first half of the year would be flat, but was confident the aviation division would post growth in the second half.

However, the flat market would provide opportunities for further acquisitions in aviation, after making four purchases last year worth £34.6m. "There are a number of acquisitions opportunities in markets where we can build up our business, and we have £250m to play with," Mr McGlone said.